A Quick Survey -2008 / 2009 - Agricultural Credit - Financial Literacy / Financial Awareness - Three Districts Punjab- Farmers / Women / Small - Micro Traders

 

A Quick Survey around 2008 / 2009 -  Agricultural Credit - Financial Literacy / Financial Awareness - Three Districts Punjab- Farmers / Women / Small - Micro Traders

 

Dinesh K Kapila

(Background This I did for my own guidance / learning, and to share in the Districts of SAS Nagar, Nawanshahr and Rupnagar in Punjab. It was not  an official survey as such. I was the District Development Manager of NABARD there from 2002-2008. Then lost track of this after making some editing changes in 2010 based on a fresh update in 2009-2010. I had maintained my links in the districts. Today in March end 2022 I came upon it again and decided to share the same. I wonder if much has changed and if it has changed then to what extent. SCCs and GCCs referred to in the paper were loan products for farmers and artisans etc at that time mainly for part consumption and mainly meeting working capital needs).   

I had done quick surveys based on interaction / filling up of forms developed by me in three districts of Punjab - Rupnagar, Nawanshahr and SAS Nagar. The SAS Nagar district was carved out of Rupnagar district essentially and I oversaw it also for quite some time. A simple format was used by me to develop an insight into the lifestyle / profile / needs /delivery and actual usage of agriculture credit in the field and the impact of literacy on credit.  

The findings, even if arrived at by a simple survey, are quite interesting and hence have been  condensed into a short paper. The survey report is annexed as regards the financial awareness / financial literacy as assessed by the undersigned in a broad and general manner through a specific survey. This was as stated above, by a specified format and through informal interaction with groups of farmers / small traders. A sample form of the format is also annexed in the start of the paper, the report derives from it. A small report on awareness levels of women as assessed by feedback is also annexed which would be found to be quite informative. 

The objective simply was to focus on areas which could be worked upon by me and if possible  by fellow bankers and Govt Agencies as I also shared it to improve financial awareness / financial literacy delivery in a practical manner. The second part of the Paper deals with SCCs and GCCs and their actual implementation in the field. This threw up insights which were shared with bankers both at BLBCs as also with controlling offices as appropriate.

(Note in 2022- This may be found to be interesting. Plus it can be assessed if the situation has changed).

These studies were not advised by my Controlling Office. The structure of this paper is as follows -

- the Survey Format for The Financial Literacy Survey.

- The Objective as Part A and Methodology as Part B.

- Part C is the findings.

- Part D is the interaction with women.

- Part E is the findings / observations.

- Part F is the SCC vis a vis GCC and implementation process.

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FINANCIAL AWARENESS QUICK SURVEY BY DINESH K KAPILA DDM NABARD.( sent out 08/04/2008)

1. Name, Age, Education and Village, District.		2. Category - pl tick any one relevant	Small or Marginal Farmer / Large  Farmer / Artisan / Labourer / Tenant Farmer / Small business.
3. Bank Name and Branch		4. Type of Account - Pl Tick - SB / KCC / SCC / GCC / Other
5. Awareness about simple interest / compound interest. -	Pl tick - Satisfactory / good / not satisfactory	6. Awareness about main banking products - savings / loans -.	Pl tick - satisfactory / not satisfactory / good
7. Aware about KCC - Rate of Interest / Terms and Conditions / flexibility	Pl tick - yes / no / is not aware / not bothered	8. Aware about GOI ROI Subvention on KCC. Aware about Interest rate calculation.	Pl tick - yes / no / is not aware / not bothered
9. Reads all terms and conditions for loans or asks banker to explain - knows fees charged / interest etc	Pl tick - yes / no / is not aware / not bothered.	10. Aware about need to save - knows about Post Office schemes / bank deposit schemes / other related products	Pl tick - yes / no / is not aware / not bothered
11. Maintains a diary / account statement of expenses incurred on farming /business	- yes / no / roughly knows / in the mind / not bothered.	12. Reads newspapers / magazines or watches TV etc for economic / business news.	- yes / no / not aware / not bothered.
13. Awareness about SCC / GCC / Small loans portfolio of banks.	Pl tick - - good / satisfactory / not satisfactory	14 Awareness about Agri Gold Cards / Term Loans to Agriculture by banks	Pl tick - - good / satisfactory / not satisfactory.
15. Can distinguish between Cost of loan from moneylender and bank.	Pl tick - yes / no	16. Understands need to repay loans and build a good credit history.	Pl tick - yes / no
17. Aware about Self Help Groups and functioning	- yes / no.	18. Visits Agri Dept / Hort Dept / KVK / Dairy Dept for advise.	- yes / no.
19. Aware about subsidy schemes for drip / sprinkler irrigation / farm equipment / SGSY / PMRY / KVIB etc of government.	Pl tick - very aware / reasonably aware / does not know.	20. Awareness about other loan products of banks - housing / two wheelers / consumption / personal loans etc.	Pl tick - very aware / reasonably aware / does not know.
21. Willing to invest in mutual funds / ULIPS - knows banks sell them and fees etc.	Pl tick - very aware / reasonably aware / does not know.	22. Knows risk / rewards aspects of investing with  mutual funds / ULIPS.	Pl. tick - very aware / reasonably aware / does not know.
23. Would welcome  literature / booklets on loans / savings products.	Pl. tick - yes / no / cannot understand / not bothered.	24. Has a banking relationship with one bank or more.	Pl. tick - one bank / two banks / three banks.

Mail / send to Dinesh K Kapila, DDM NABARD, Ropar / Nawanshahr /SAS Nagar Districts. 221 Giani Zail Singh Nagar, Ropar. 98724-78866. dineshkapila2002@yahoo.co.in

 

FINANCIAL LITERACY / FINANCIAL AWARENESS QUICK SURVEY RURAL AREAS - FARMERS PLUS SMALL / MICRO TRADERS / WOMEN.

                                                                       - By Dinesh K Kapila, AGM NABARD.

 

A. OBJECTIVE -

The objective of the survey is to analyze the overall financial awareness and literacy (not in school class passed terms but actual financial ability) levels of farmers - both large and small / marginal as also the small businessmen / traders in the rural areas / near rural areas and develop an insight into their existing profile. An example is that from the survey / interactions it is evident that not even one large farmer knew about the futures markets or their working or warehouse receipts etc. The marginal / small farmers are totally oblivious of such markets. A survey cum informal interaction approach was adopted to test out the degree of financial literacy. It may be noted that while a population may be financially included, it necessarily does not imply it is financially literate or financially aware, the survey essentially tests this aspect in rural areas as also issues related to the subject of the survey. This would be essentially relevant to a high credit state such as Punjab but certain issues would be common across socio economic strata and states.

B. METHODOLOGY.

The survey was initiated in April 2008 informally as an initiative of the undersigned. The word study is not used as it connotes a very in-depth and rigorous analysis. A format was developed and used across for 225 responses across three districts - SAS Nagar / Nawanshahr / Rupnagar. These were a mix of LF / SF / MF / Small / Micro Businessmen / Artisan.  (Large Farmers / Small Farmers / Marginal Farmers). The NGOs / Banks were used as conduits and the undersigned personally also carried out some extensive interactions, taking notes informally, used in the survey as a part of the observations.(Note in 2022 – I lost all my background notes in the floods in Srinagar where I was posted later). Over 500 farmers would have been interacted with informally (no formal questions asked in a structured manner)  for this purpose. The multiple viewpoints noted or heard at such interactions stand summarized / incorporated in the survey, as a supplement to the formal survey (incorporated as observations). 

The format endeavour to capture all the facets of financial markets - awareness of financial products / pricing of products / savings and loans products / awareness of new financial products. Also covered is interaction by farmers for enhanced awareness with extension agencies / media for awareness etc., as ultimately it leads to higher productivity / investments thus leading to higher credit needs and cash generation.

- The Findings. Based on the survey and supported by observations from informal interactions. This is at Part C.

- The summary of interactions with women, in Part D.

- The main comments / observations, in part D.

The sample size is as follows -

Small Farmers   -123 farmers Marginal Farmers - 37. Large Farmers - 30.  Small Businessmen - 25. Tenant farmers - 5. Artisan - 5. For all practical purposes, the tenant farmer / artisan are closely aligned with the profile of the small or marginal farmers. Over 500 farmers and rural inhabitants would have been interacted with informally in addition. Education wise, most are found to be matriculates, with class VIII Pass being the minimum with a couple being graduates as also a diploma holder. Thus literacy levels as such are satisfactory.  

The survey is evidently and admittedly purely broad based and seeks to search out analytically as also by interaction the overall financial awareness profile of farmers / residents of rural areas. It has depended upon the feedback of the farmers only as cross verification of data was not attempted or of the opinions made due to time constraints etc. However, the survey only aims to derive an insight into the financial knowledge profile as also general awareness of our farmers / small traders and to that extent the accuracy can be deemed to be quite satisfactory.  The limited summarized comments based on informal interaction (no formal questions in a structured manner)  with rural women would be found to be equally interesting and insightful.    

 

C. THE FINDINGS. 

These are as below in a serial order format of first discussing the relevant issue and main observations, as sequenced in the format. Hence the details start from serial number three of the survey format and then go on in a sequence. 

3. Banks Associated worth - These are a cross section - Major Commercial Banks- 5 Banks - 50 farmers, District Cooperative Banks - 3 CCBs - 50 farmers , the Regional Rural Bank - 1 Bank - 30 farmers and Private Sector Bank 2 - 10 farmers. 

4. Types of Accounts - All surveyed had Savings Bank accounts; Kisan Credit Cards, limits from CCBs. Limits from CCBs through PACS are the main relationship with banks.

5. Awareness about simple interest / compound interest. - The statistical response is as follows from amongst 225 responses received - 

Satisfactory - 92. Good – 53 Not Satisfactory - 80.

Observations - The main insight is that its the large farmers who have a better knowledge of interest rate calculations while the small and marginal farmers are at times unable to even define what is interest and its calculation, definitions are unknown and they are totally dependent upon the PACS Secretary or the Branch Staff of the bank for knowledge about the interest charged, or some opinion leaders from the village who interact with the bank. The traders / small businessmen were ok with this concept and even the artisans.

An interesting sidelight is that a group of aware farmers informed me during informal interactions that while they knew the PACS Secretary was charging higher rates of interest than stipulated but then the official also had to make up the costs attendant with the cooperation department. Another interesting sidelight is that as per a few farmers; hidden incentives are readily extended by them to the service provider as long as the main service is found to be given in a timely manner - of whichever organization. Their experience suggests a mixed atmosphere may prevail on this front.  

6. Awareness about main banking products - savings / loans -The statistical response is as follows from amongst 225 responses received - 

Satisfactory - 136. Good - 41. Not Satisfactory - 48.

Observations - This is apparently not really correct, as the respondents mostly know only the basic minimum such as limits / savings bank accounts and then fixed deposits. Deeper awareness such as knowledge of the rules and processes of banks for assets and liabilities products, eligibility criteria etc. are not known to many farmers / small businessmen. The majority of small farmers / small businessmen also report feeling under confident in initiating discussions with bankers on this issue, specially if the amount to be borrowed was small. It could also be a lack of social skills and awareness or embarrassment. Secondly, some farmers prefer to invest a part of their cash surpluses with arhtiyas / moneylenders. Thirdly, an interesting sidelight; arhtiyas / commission agents prefer to distinguish themselves from moneylenders and are quite clear on this aspect !  They demand an acceptance of this reality.

7.  Aware about KCC - Rate of Interest / Terms and Conditions / flexibility - The statistical response is as follows from amongst 190 responses received -

- Yes - 152. No - 22. Not Aware - 7. Not Bothered -9.

Observations - While farmers know about limits from the CCB or the KCC generally, a deeper awareness of rate of interest in an accurate sense and the usage with flexibility is yet to emerge. Its mainly the larger farmers / progressive small farmers who are using credit products as designed. As regards rate of interest, there is a belief in the accuracy of computers; while a correct belief; there is still a need to ascertain the actual rate of interest charged by the bank. Some complain that Banks tend to turn away marginal farmers, specially if the holding is less than an acre. .

8. Aware about GOI ROI Subvention on KCC. Aware about Interest rate calculation.  Statistically, only 129 farmers out of 190 farmers have stated that they know about the interest rate subvention from GOI. The rest have stated that the options are from no / is not aware / not bothered.

Observations - Even if they know that the interest rate is subsidized, farmers are unable to connect it with GOI subsidy as such, this is reflected in the above scores. Most farmers, when asked as also made aware of the subsidy from GOI, in fact demand an even higher subsidy on interest charged on crop loans or cheaper and quicker loans.

9. Reads all terms and conditions for loans or asks banker to explain - knows fees charged / interest etc. - The statistical response is as follows from amongst 212 responses received -

- Yes, 143. - No,47  Is Not Aware, 16. -Not Bothered. 6.

Observations - The main observation supported by informal feedback received from farmers is that they are essentially dependent upon bankers / informal intermediaries from the villages for any inputs or knowledge about terms and conditions. Trust in bankers is also of a very high degree, in fact bankers who have built a sound relationship with their clientele are totally trusted and believed in. Banks as such are trusted implicitly. This is a fact.  

10. Aware about need to save - knows about Post Office schemes / bank deposit schemes / other related products - The statistical response is as follows from amongst 225 responses received -

- Yes, 109. - No, 96. - Is Not Aware,19. - Not Bothered. 6.

Observations - Post Offices are preferred by the smaller earners / marginal farmers normally - specifically because of agents with the same socioeconomic commonality or community and even the staff. The Recurring Deposits of post officers are also popular as are the certificate schemes (KVPs) etc. An interesting sidelight is that land is nearly an obsession amongst farmers surveyed and the preferred asset class mainly, then only other products are considered or taken up. 

11. Maintains a diary / account statement of expenses incurred on farming /business            -. The statistical response is as follows from amongst 190 responses received -

Yes - 66. No - 79. Roughly Knows 28. and In The Mind - 10. not bothered -7.

Observations - This is a serious issue as the farmers are basically going in for farming by broad estimates and are also unable to connect the need for an input with its utility as even the cost implications escape them - example - repeated doses of pesticides are costly and not useful but still applied due to hearsay. Even large farmers are unable to state accurate expenditure data. A common refrain from the farmers and even agriculture department is that farmers would leave farming in case they knew the actual costs of operations and returns. Its of no use to explain to both the farmers or department that any business / vocation, including farming, must know its financial status to enable alternative viable propositions to be explored effectively. Again lack of literacy levels as demanded by modern day agriculture may be impacting on progress on this aspect.  

12. Reads newspapers / magazines or watches TV etc. for economic / business news.          - The statistical response is as follows from amongst 225 responses received -

Yes - 63. No - 124. Not Aware - 31. Not Bothered. 7.

Observations - For an economically advanced state these are disturbing responses, even those who watch TV / Hear Radio / Read newspapers or magazines, do so only / mainly for religious programmes and secondly for a reduced degree watch mass entertainment or criminal news etc. The preference for economic /developmental news is very limited. Even villages in the kandi belt are reported where most families are yet to take to reading newspapers. Only approximately 5 % - 8 % of farmers I could interact with read magazines from PAU / Kheti Duniya etc.  However, there is a huge demand for lifestyle products and vehicles, specially in the younger generation belonging to the better off strata. This again implies an immediate need for reaching out with financial literacy to be embedded, as the costs of such lifestyle products are not understood.    

13. Awareness about SCC / GCC / Small loans portfolio of banks.  The statistical response is as follows from amongst 225 responses received -

Good -105.  Satisfactory  - 82.  Not  satisfactory -38.

Observations - The generic product names such as SCCs / GCCs require publicity and a detailed reaching out to the SF / MF or small businessmen for extending micro loans. The Cooperative banks and gramin banks are perceived to be more friendly as regards the small loans by the SF’s / MF’s or small businessmen. The Large Farmers are unaware as the above does not apply to them. Many stated that there were too many cards being discussed as in addition to the generic KCC / SCC / GCC / ACC, the banks often created their own brand names and this tended to create confusion.

14 Awareness about Agri Gold Cards / Term Loans to Agriculture by banks  -   The statistical response is as follows from amongst 190 responses received -

- Good -67, Satisfactory - 69, Not Satisfactory 54.

Observations - The large farmers and the more aware amongst the SF’S / MF’s are knowledgeable about the Term Loans / PADBs Loans etc. but the SF’s / MF’s are otherwise dependent upon the informal intermediaries / other aware farmers / opinion makers at villages to approach the banks. Many report feeling more at home with PADBs but the limits of commercial banks are more attractive to them now. Higher the land holding, generally higher the awareness levels - this supposition is largely found to be accurate in informal interactions. Limits from PACS for crop loans are nearly universal. 

15. Can distinguish between Cost of loan from moneylender and bank. The statistical response is as follows from amongst 225 responses received -

- Yes - 186. No -39.

Observations - The responses are encouraging in that the respondents know the differences overall, but yet the approach to money lenders continues. However, in informal discussions at many meets; the actual cost difference is still not actually known, the feeling generally is that easier access to moneylenders makes up for the difference without knowing the costs involved in reality. The informal responses elicited are - Bank funds are insufficient to meet needs for many types of expenditure in running a household; ease of transmission of funds from moneylenders is another reason for approaching them as informality / secrecy / minimal paper work are high on preferences in financial transactions by most farmers / small businessmen. Marginal farmers are the main segment who state that they depend to a large extent upon arhtiyas / moneylenders for access to credit for consumption expenditure. 

There is an interesting sidelight, many state in discussions that the money lender charges a higher rate of interest, but the method of calculation is not known to many and some admit that they do not ask the details also. Another interesting sidelight is that there are costs attendant as implied to using informal intermediaries also to obtain loans from banks, as stated by farmers in informal discussions. An interesting point made by some farmers is that repeated trips for loans to a branch have a transportation cost angle, say bus fare; which may not be understood by bankers, specially as regards the marginal farmer or small trader or daily wager.  They also do acknowledge that the Arhtiya / moneylender does at time have a political hold as to their preferences.

16. Understands need to repay loans and build a good credit history.      The statistical response is as follows from amongst 225 responses received -

Yes - 191; No 34.

Observations - This may not be understood as above by most respondents but to avoid social stigma or for self respect or due to pressure from cooperative banks etc., the respondents and farmers etc. interacted with otherwise consider repaying a loan or the limit a commitment to be kept. Farmers are also used to the sanction of limits, their being drawn upon and repaid by seasonality etc. Credit history is a term still to evolve in rural financial markets. Bankers also seek / need a database for extending loans, as it would enable information to be exchanged about borrowers profiles.  

17. Aware about Self Help Groups and functioning - The statistical response is as follows from amongst 152 responses received -

- Yes -58. No -94.

Observations -This even to those farmers / ruralites who are aware is considered generally a movement for women only with no intrinsic beneficial connection with the family or men. The concept that even men can form groups for collective action is not an attractive idea to those interacted with even after discussing the successes which have emerged. In addition, with the CDPOs plus NGOs associating in the exercise and DRDA, this does indicate lack of interest by males of villages in happenings around them or the actual ground level impact of SHGs is yet to concretize to a degree that it impacts the consciousness of men folk in villages / habitations. An interesting sidelight noticed is that irrespective of social or economic status, at meets, the men generally adopt a paternal air of indifference when SHGs are taken up for discussions. 

18. Visits Agri Dept / Hort Dept. / KVK / Dairy Dept. for advise.    - The statistical response is as follows from amongst 175 responses received -

- Yes - 67. No - 108.

Observations -This is supported by the fact that most farmers interacted stated they rely on informal intermediaries at villages to go to departments or revenue officials for obtaining inputs or to arrange for registration of documents for loans. In any case, specific responses elicited were that the sarpanch / opinion leader / progressive farmers of the village are the major source of accessing information on developments being initiated for the benefits of farmers. This again is connected to the disinterest shown in building up awareness levels through accessing the visual / print media.

19. Aware about subsidy schemes for drip / sprinkler irrigation / farm equipment / SGSY / PMRY / KVIB etc. of government.           The statistical response is as follows from amongst 134 responses received -

Very Aware - 29. Reasonably Aware - 72. Does not know - .33

Observations -This is validated by the field level interactions where generally smaller the farmer, higher the level of ignorance of schemes, specially on irrigation etc. Interaction with functionaries of departments also reveals a higher degree of flow of benefits of such schemes to certain segments  but this requires deeper examination. In addition, the names of schemes such as SGSY / PMRY are generally not known to the actual beneficiary though the actual benefits may have been availed but the intermediary normally knows the processes and the scheme. A higher degree of education and reading literacy amongst farmers / ruralites would reduce such tendencies.   

20. Awareness about other loan products of banks - housing / two wheelers / consumption / personal loans etc. The statistical response is as follows from amongst 225 responses received -

Very Aware - 73. Reasonably Aware - 113. Does Not Know . 39.

Observations -The observation again is that the small or rather micro businessman, the micro trader so to say does state informally that he is afraid or too timid at times to enter a branch to ask if a loan of say Rs 25,000/- or in this range can be sanctioned to him. The corollary is that the branch may also ask him to go to an intermediary or the government official concerned at the block and get sponsored for a government sponsored programme as a margin of safety for any default or risk of non payment. This response, when it occurs,  is mainly reported from the commercial banks while the regional rural bank generally extends a better response as do cooperative banks, but then cooperative banks also state that they have the maximum default from loans upto Rs 25,000/- and have to reduce lending to such segments at times. The better off farmers / those with relatives abroad / NRI Relatives face no problems in awareness for availing loans. The farmers or small traders who establish sound relationships / credit track records generally fare better in awareness levels as the bank itself starts guiding them.    

21. Willing to invest in mutual funds / ULIPS - knows banks sell them and fees etc.      The statistical response is as follows from amongst 119 responses received -

Very Aware - 19 Reasonably Aware - 37. Does Not Know 63.

Observations -The penetration of products and knowledge is very poor even to sub divisional towns or block headquarters. Trust or awareness levels are very poor in such products. Banks also are yet to sell such products actively. In addition, the knowledge that even small amounts can be invested regularly and returns can be fairly high say compared to Fixed deposits or Post Office products is unknown to even farmers with a high degree of incomes. The ability to invest with comfort through a recognized financial intermediary is also lacking in most habitations / towns. Importantly, farmers would rather invest in land than financial products due to the degree of familiarity with land markets. Financial Service Providers such as Mutual Funds and Insurance Companies need to educate the farmers about risks and rewards in these products.

22. Knows risk / rewards aspects of investing with  mutual funds / ULIPS.      The statistical response is as follows from amongst 119 responses received -

Very Aware - 13 Reasonably Aware - 35. Does Not Know - 71.

Observations -The main issues are two fold - awareness is low as brought out in point 21, in addition, the risks are not understood. Fourteen  farmers met with who invested by drawing upon KCCs and then routing them to ULIPS / MF’s or even to LICs could only state that after deduction of interest the appreciation would amount to something much better than safer products. The possibility of a down slide in market related investment instruments or risks of leverage was not understood. There is some informal feedback about a few branches aggressively marketing products involving cross selling including life insurance products by drawing upon sanctioned limits such as KCCs and the attendant risks being not being explained properly. This however would need a deeper examination as to veracity.But farmers / small businessmen do report this.

23. Would welcome  literature / booklets on loans / savings products.    The statistical response is as follows from amongst 162 responses received -

Yes - 97. No - 6. Cannot Understand - 31. Not Bothered 28.

Observations -The main response is of a yes but there is an apprehension about literacy levels being not compatible with the reading material, specially amongst those who chose to state not understood. A verbal explanation is more easily understood as per some farmers interacted with, this underscores the need to embed higher levels of literacy amongst farmers. Literacy skills leading to a higher order reading habit need to be stressed. Verbal communication cannot convey the full import of a scheme / product and its conditionalities, at many meetings, the farmers / ruralites are unable to comprehend that a housing loan would not be extended just because a speech on this product has been made, the connection with income levels, documentation, legal issues escapes many. Again, the knowledge of futures markets / commodities markets, warehouse receipts was found to be nil, some may have heard about it, that's about all the knowledge available.  

24. Has a banking relationship with one bank or more.          The statistical response is as follows from amongst 225 responses received -

One Bank - 79. Two Banks - 141. Three Banks - 5.

Observations - As per farmers, this includes limits from CCB plus from a commercial bank or the RRB. Interaction reveals that the more aware farmers have learnt to approach a number of banks to analyze the highest amount they can avail as loan, with banks often succumbing to sanctioning higher limits also, by way of adding leased land etc. to enhance the credit limits.

Feedback as such - Traders / small businessmen have a high desire for specific products tailored for them. They state that they would turn to an alternative like NBFCs / MFIs if given a chance or if they reached out. The artisans also sought a similar facility. In all my interactions this came out.  

JLGs somehow with all the sensitization and camps, the idea and concept of JLGs was a non starter except in a few cases. Cultural norms and practices require a deeper reaching out to. Plus the Government Officials also tend to downplay the amount etc stating it’s too less for Punjab.      

 

D. Interaction with Women - 

Interaction with Women - Their Viewpoints, Profile and Requirements, and Impact of Proximity to Urban Areas

The interactions were at varies places in the districts referred to -

(a) First, what would be really representative of what occurs in smaller villages dotting the kandi areas (dry semi hilly regions) in Punjab; - around 60-70 women had gathered at a function by a NGO, ASRA, from three villages near Anandpur Sahib town. Four SHGs formed there had become functional and had initiated internal loaning, as also started the process of establishing a relationship with banks. However, the following was lacking -

- Not a single woman - from amongst all present from age groups of approximately 18 to 45, was reading a newspaper or magazine. Reading was strictly religious, if at all.

- There was no awareness about products of banks, either of asset or liability classification.

-  Literacy was upto class VIII normally with a few matriculates, but literacy skills were lost due to lack of application.

- A felt need for subsidy or grants from the government was maximum.

- No knowledge of insurance as a method to minimize risks was known or found amongst them.

- Small credit needs for consumption expenditure was found to be the main demand.

- Entertainment vide TV was common but with a religious bias, quite regulated and minimal emphasis on current affairs etc.

- The NGO and CDPO faced problems in accessing the villages in kandi areas due to distances, transport issues and banks being located only on the main highway.

(b) At a village in district Nawanshahr, near an industrial belt, where a major commercial bank had decided to be pro active; it was found that -

- Small credit needs, specially for operations - say Rs 7000/-, a washing machine for Rs 15,000/-; Rs 5000/- for three women to start making detergent powders, Rs 25,000/- to stock items at a shop, Rs 50,000/- to repair a house etc. were the main demands. Dairy animals to be added by individual members was another demand from members of SHGs. The bankers reaction at branch head level was interesting in that where ever he found that the husband had a sound credit record and a tangible security, he was ready to state that the loan could be sanctioned, but was extremely reluctant to entertain requests for even Rs 5000/- or Rs 7000/- as loans in the absence of any tangible security, even if the husband had a job as a contractual employee at a factory nearby earning him Rs 4500/- per month. The branch head apprehended that the contractor could dispense with the employee any time and the loan would be non recoverable. These are the realities of rural financial markets. The Branch Head’s apprehension was consistent even when his Regional Head was making commitments of financing to the women.  This is representative of the major barrier - the bankers, particularly from commercial banks, on rural postings, are not used to handling micro loans which are collateral free.

At this village the CDPO ICDS had formed 10 SHGs and there were two SGSY groups formed by the DRDA, however, though migrant labour was present in large numbers, the female family members were getting minimal access to SHGs and credit, the major reason stated as that the capital was not secure as they could shift base anytime. This when they had been there for five to ten years. Even bankers were found reluctant to entertain them. The NGO SSMES was also working in this village.  

(c). At villages near Chamkaur Sahib and near Daburji, which are partially urbanised and have a more aware profile, women were found to be extremely desirous of earning and adding to the family incomes. Education levels and general awareness levels are generally higher near small towns. Members of SHGs are raising funds by subscribing Rs 100/- to Rs 200/- a month and this ultimately results in a reluctance to avail bank loans as their own funds are found to be sufficient for meeting limited consumption needs.  At these areas, a large number of SHGs had been formed by the NGOs SSMES (over 100 SHGs) and Ambuja Cement Foundation (60 + SHGs) as also CDPOs of Ropar and Chamkaur Sahib Blocks; over 250 SHGs were functional.  

(d) Social mores however continue to be a strong negative influence as regards women, specially enforced by the established opinion makers at villages, at the level of sarpanch / ex sarpanch etc.  Even the police is observed to be biased against women in noting complaints from them. Social power structures continue to be vested with men even if the women are elected to certain positions - the women concede this reality readily. In addition, as some women replied to a specific query - on a male child's birthday, if male; sweets could be distributed but for a female child; a prayer at the local religious place was enough.  Across Ropar, while travelling in the kandi areas with the NGOs RHDC or ASRA or the CDPOs or whether in the highly productive plains with SSMES or ACF or CDPOs; the gender discrimination is conceded as reality in institutional terms by women. The women support SHGs as this facilitates access to empowerment and a collective approach to problems. At a village near Nurpur Bedi, women members of SHGs got together and coerced the police station to register cases against some influential families in land dispute. This had given them immense encouragement. 

(e). Bankers, generally from commercial banks, are found to be still averse to extending loans to SHGs for consumption loans and are fixated with a stress on income generation efforts being connected with the extension of the loans to SHGs. Loans even of Rs 40,000/- to Rs 50,000/- are not sanctioned or delayed on this account at times. The Regional Rural Bank however was noted to have a very sound record in general as regards the loans to SHGs and encouragement to this sector as also many branches of the cooperative bank. As regards commercial banks, it is individual led efforts which stand out more than an institutionalized approach.

A frequent reason given is that with a high credit profile and average deposits of Rs10.00 crore to Rs 12.00 crore even at a small branch in Punjab, loans of a higher quantum were only profitable for the branch.

- Transfers affect performance and relationships, at a ADB of PSU Bank, the Branch Head was extending loans of Rs 2.50 lakh to General SHGs for consumption expenditure, his transfer resulted in an immediate slow down as the successor was from HP and used to extending loans of a small amount only. The women members of SHGs affiliated to the branch were old SHGs with savings of Rs 50,000/- to Rs 80,000/- and desired only loans of a higher quantum. This created a disonance and often required intervention.  

(f). Incidentally, even if migrant labour has been present for 10-12 years at a single location, access to any banking service is uniformly denied normally, to men or women as the case maybe.

(g). Rural women, once aware and trained in financial literacy - specially rates of interest and fixing installments -  are found to generally demonstrate a higher degree of financial literacy and awareness as also discipline than the men by NGOs. Women were also found to be serious in learning the concept and adopting it. The deep felt need of these women to access credit and opportunities can only be felt and understood by interaction. 

(h). Marketing facilitation is a major demand by SHG members as social mores prevent many from considering venturing out to even nearby towns for marketing their products.  Quality of products remains a gray area though individual success stories are occurring. This is a major area of concern as groups evolve. With major corporates launching products at multiple price points in villages in Punjab, marketing is a gray area. 

 

E. Summarized Comments / Observations.

1. There is a still a marked tendency to use the services of informal intermediaries amongst farmers to approach banks / other service providers, specially amongst those who own marginal holdings or are semi literate. Bankers with sound relationship building skills fare much better in building up effective business profiles in rural areas.       

2. Ruralites would prefer a mix of the moneylenders informality and formal systems and procedures of banks, may be the flexibility inherent in the system of banks as regards KCC specially needs to be embedded by extensive efforts, with a focus on the small / marginal farmers as larger farmers are already comfortable.  

3. Literacy profiles need extensive capacity building - for a usable / applicable realistic literacy profile attuned to day to day requirements. Financial literacy is limited as of now even amongst the larger farmers and women. This would ultimately enable costing to be adopted and cash flows developed as also a higher degree of awareness to emerge. It would also reduce the acute dependency on the opinion makers / influence makers by many farmers / micro traders /women.

4. There is certainly a requirement for financial services providers such as Mutual Funds / Insurance Companies to tap the savings pool in rural hinterlands - they need to educate the farmers with cash surpluses as also to enable investment opportunities closer to smaller towns / habitations. However, the rural areas require extensive education about the risks inherent in such financial products and investment options.

5. Government programmes require more publicity and at the same time the conditionalities are to be clearly specified. Repayment in government sponsored programmes connected with lending by banks needs to be explained and insisted upon. Bankers need to publicize SCCs / GCCs as also the insurance component of KCCs / SCCs. Small loans as a portfolio may need a separate review by controlling offices.

6. The interest rate subvention needs to be explained as also the absence of compounding on agriculture loans; this would impact farmers positively. Secondly, the farmers do require education on calculating rate of interest / products etc.  

7. Insurance as a risk management tool - for self / family / products; is yet to be understood by most rural inhabitants, more marketing / education on this front is required. 8.

A purely commercial transaction / paid service based mutually respectful relationship is desired by most farmers with banks / departments. This does occur for the aware / larger farmers but the micro / marginal economy based ruralites feel externalized from the existing system and structure. The word beneficiary for loanees needs to be reduced in usage at banks even if government departments need to use it.

9. Gender discrimination as regards women is a reality and needs to  be acknowledged. Extensive campaigns to overcome entrenched social barriers are required.       

10. Non farmers, specially artisans, state they are unable to offer collateral for small / micro loans, if requested it is often denied and at times they do not even request out of a fear of refusal. The micro or marginal trader also requires access to low cost credit. 

11. Women require to be mobilized into SHGs and the existing SHGs require a qualitative upgradation also for enhanced empowerment and higher credit flow. Commercial banks have  to be guided not to insist upon income generation training activities by SHGs while extending loans to SHGs, 

12. Overall, the farmers concede they do have a satisfactory deal on the whole financially in terms of services from banks. Access, timeliness, etc. are all conceded to be extended to them, specially if the farmers are having comparatively larger holdings. Its the smaller player in whichever vocation in rural areas who needs to be reached out to. 

13. The role of government machinery is very important - specially the leadership role of the DC / ADC; this provides an impetus to the functionaries down the line.

14. Small Traders / Small artisans / Small businessmen also require a specific range of products.

 

Note - In addition to the above, a deep hunger for economic progress and financial prosperity is noticed very clearly in rural areas coupled with a strong desire for infrastructure amenities.    

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 Part F. Swarozgar Credit Cards and General Credit Cards - Their Specific Aspects and Actual Implementation in the Field.

 

The proforma used to analyse the products is as below and the main responses and findings have been included within the response sheet. Over 50 branch heads / officials and 100 customers would have been interacted with in this survey. 

 

Have Branches Issued SCCs	Yes, some. RRB certainly. PSU Banks limited.	Have branches issued GCCs.	Yes. RRB Certainly. PSU Banks some.
Quantum of Limits Sanctioned SCC	Max Rs 25,000/- at times Rs 50,000/-	Quantum of Limits Sanctioned - GCC	Rs 25,000/- generally.
Rate of Interest Charged on loan from SCC	1. 9 %, 2 11.25 %	Rate of Interest Charged on loan from GCC	1. 13 %, 2. 13 %, 13.25 %.
Security  taken to issue SCC	versions - - Hypothecation of assets obtained from bank finance. - No security upto Rs 25,000/-, III party guarantee. - Hypothecation of primary asset.	Security  taken to issue GCC - specify	Versions - Nil. - personal secuirity of deposit account holder.
Maximum Limit Sanctioned under a  SCC	Rs 50,000/- - some banks restrict to Rs 25,000/- only	Maximum Limit Sanctioned under a GCC	Rs 25,000/-
Any Limit fixed or can vary as per need within a band - minimum to maximum band please specify	No minimum limit, maximum limit Rs 25,000/-.	Any Limit fixed or can vary as per need within a band - minimum to maximum band please specify	Max fixed, limit as per need of the applicant.
Any purpose Wise Restrictions in SCC	Most banks state no restrictions, some state for any income generation activity, or for off farm activity including shops or any business venture etc.	Any purpose Wise Restrictions in GCC	none
Any Location constraints to issue SCC - Rural / Semi urban / urban	none	Any Location constraints to issue GCC - Rural / Semi urban / urban	none
Period for Issuance	Issued for 3 years., some state 5 years.	Period for Issuance	Issued for 3 years.
Period for Renewal	Every year, some state after 3 years.	Period for Renewal	After 3 years. Some state yearly.
SCC Issuance - Criteria to fix the limit - Activity specific or security linked or a mix or what	Activity specific generally.	GCC Issuance - Criteria to fix the limit - Activity specific or security linked or a mix or what	Normally not examined.as per need of the applicant.
SCC Issuance - Any term loan / working capital criteria adopted	Mostly for working capital. At times for term loan.	GCC Issuance - Any term loan / working capital criteria  adopted	Only for working capital.
Any target from Regional Office to issue SCCs	Certainly for the RRB, PSU Banks state a mix of no targets given by regional offices to some getting targets from their regions.	Any target from Regional Office to issue GCCs	RRBs certainly have targets, its a mixed response from PSU Banks, some state yes, some state cannot recall a target as allotted.
Insurance if any done of SCC holder, if so, for how much.	Personal Accident insurance is done by RRB, PSU Banks do not normally do insurance.	Insurance if any done of GCC holder, if so, for how much.	None.
As a banker - would prefer to issue SCC or GCC - and why or both are preferred	Its a mixed response, the GCC is preferred as formalities are fewer in documentation and end use is not to be ensured. Some state both products have their merits, but state limits should be enhanced, in addition, the activity specific restriction of SCCs removed. GCCs generate more income for banks as the ROI is higher, so some prefer them.  The reporting of 50 % of advances under GCC under indirect agriculture is also an incentive to banks.
Policy Guidelines - clarity from Regional Office regarding both products - clear and monitoring is card specific.	Policy guidelines are clear and lucid. Monitoring by controlling offices does not involve actual checks of cards / accounts normally in PSU Banks and is feedback based, though some officers from PSU Banks state specific checks of individual accounts is being done, though irregularly.
Customer Preference - for SCC or GCC and why	Its a mixed response from bankers and customers alike, the lower ROI on SCCs makes it attractive to some, while the ease of obtaining GCCs is a major attraction also. Some bankers state customers are indifferent - the customers are not even aware about the products or the differences between them. This was collaborated by many customers met briefly to inquire about this crucial aspect.
Customer awareness of both products - choices given - majority do not know, majority know, its a mix or can’t say	Mostly a mix, most bankers state customers want money at convenience and with reasonable ROI, the name of the product is not important. Customer awareness is limited normally, this is a common perception. Customers from lower economic strata state the products, benefits and usage are often not explained to them properly, most stated in punjabi - ‘aaram naal samjhao’ - that is they seek details with patience. Branches complain of being understaffed.
Customer is clear about specfic role of each card or briefed by staff	Only a briefing by the staff after specific queries results in adequate awareness amongst customers, as normally brochures / leaflets on these products are not displayed at branches or boards put up about these products.
Ease of usage by customer - SCC or GCC and why.	Both are equal in ease of usage is the feedback. These are limits which make them easier to avail..
A card is actually issued or only a limit is stated as SCC / GCC Issued	Cards are stated to be issued normally, one bank stated even access to the ATM is given through the card. Some bank branches were evasive on this issue.
Card Issuance - SCC or GCC - part of controling office review - yes / no / cannot say .	Cards are issued by branches, reviews are limited except for data analysis. Some bank branch officials maintained silence on this aspect.
More awareness or Publicity Would help in issuing both cards by banks	This is a common feedback, generic publicity is sought for by branch staff and customers alike.
Repayment  perception - Better in SCC or GCC or same or cannot state as of now	Mostly reported as same, though opinion is repayments by SCC holders do run into difficulties at times. Some officers / staff would rather not comment as of now.
Degree of clarity About both products in the branch  - Very Clear / Satisfactory  / Needs Improvement  / Not Required as not a priority	Most bank branches opt to state satisfactory to the query but it was often observed that officers at branches, specially in commercial banks, were often not clear about the modalities and depended on clerical staff for implementation / clarifications.
Target to issue SCC in 2007-08	Targets given in most cases.	Target for GCC	Given in most cases.

 

Conclusions.

The customers are not even aware about the products or the differences between them, this is a crucial learning point as is the need to post / place officials who empathize with the profile of rural customers, specially from the comparatively lower socioeconomic segment. Branches need adequate staffing also, this applies to all agencies - cooperative (no recruitment for 5 or more years), RRB (upward mobility limited and clerical recruitment low) as also commercial banks.

While the specifics of the products are different, but both aim to provide adequate and timely credit to customers of a small amount, normally Rs 25,000/-. Secondly, even in SCCs, mostly its for working capital; this is where the over lapping occurs of the products.   

Secondly, there is often confusion about the brand names given by banks and the minor differences amongst products with similar features from different banks. Many progressive farmers / customers at branches stated when asked that a simple product would do but it should be readily available.  Instructions take long to filter down to branches and their implementation is often tardy, specially where the branch head is completing his tenure or has been posted from a semi urban / urban area, specially in major commercial banks. The comfort levels are on the contrary very high with the better off socio economic customers.

Controlling Offices of Commercial Banks need to take a deeper interest in issuance and usage of the products as this would motivate branch heads to work on the products. The tendency at times  in Punjab, with high deposits and advances at branches, is often to seek out customers with a higher economic profile and to minimize risks / exposure to the micro amount credit seekers. 

The other issue not directly related but a major learning point is that at times a head of a controlling office comes in with a lot of commitment and zeal to ensure delivery to the last mile customers from the lower economic strata, the branches do tend to respond positively to such zeal and directions but tend to slacken off once the official is transferred.

The multiplicity of cards - KCC / SCC / GCC / ACC etc. / brands needs to be suitably monitored also and their implmentation in aspects ensured, say, insurance in case of SCCs.

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